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Goldman Sachs: Putting Lipstick On A Pig

If you are wondering whether the culture of greed on Wall Street--a culture that led to the cratering of the economy just a year ago and the loss of millions of jobs for regular Americans--I present to you news about Goldman Sachs, which will quickly remind us that very little is changing.

Just a year after surviving the financial crisis with billions in federal aid, the banking giant Goldman Sachs reported results Thursday that topped expectations.

Goldman said that it earned $3.19 billion in the third quarter, powered by mergers and acquisitions fees and strong securities trading. Revenue was $12.37 billion.

As a reminder, your tax dollars helped bail out that firm. And what will the firm do with its windfall?

Goldman also disclosed how much it had set aside for its annual bonus pool. It said that it had earmarked $5.35 billion in compensation and benefits, an increase from the year earlier period, putting it on course for a record payout to its executives by the end of 2009

The results were another sign that the financial industry was on the mend but they also raise questions about whether such payouts were justified so soon after all the federal assistance Goldman and other Wall Street banks received.[emphasis added]

Nothing has changed, really--except the realization by Goldman, and I presume other Wall Street firms, that the problem is not their irresponsible behavior that cost so many people their jobs (including ten percent of Goldman's own workers) and will likely mean at least a decade of economic hardships for millions of Americans. No, it's a public relations problem.

Hoping to defuse a politically combustible situation, Goldman officials have been mounting a soft-sell campaign that pushes the usually reticent company into the spotlight. For months, the New York firm has been working to dispel what it sees as misperceptions about itself to make its profit and bonuses go down easier, from a lobbying push in Washington to media interviews in which Goldman Chief Executive Lloyd Blankfein reminisces about his humble roots.

His first job was selling peanuts and popcorn at Yankee Stadium.

Company executives also have discussed increasing charitable contributions by the firm or by encouraging employees, according to people familiar with the situation. Such a move could help Goldman repel any public backlash it suffers as a result of this year's bonuses, which will be decided near the end of the fourth quarter and paid out in January.[emphasis added]

Here, in a nutshell, is the problem we face: almost nobody on Wall Street wants to truly change the rules. They view the problem as a p.r. problem to be managed in the short term. Once the anger boils over, they hope, it will be business as usual and back to the culture of The Audacity of Greed.

It is not simply the issue of pay, frankly. The over-the-top pay and bonuses are the natural outcome of a system in which we still worship the so-called 'free market' at the expense of the broader public good--the public being a system where the fruits of peoples' labor is truly shared. Getting there is a long-term challenge. We know what the problems are--and the solutions are pretty clear.

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